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CyrusOne Inc CONE

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Strong Q2 for CyrusOne, but Abrupt CEO Departures Becoming a Habit

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

It’s been less than 18 months since CyrusOne’s surprising announcement that it had immediately parted with its longtime CEO and that an interim CEO would be leading the earnings call. The firm announced a permanent CEO, Bruce Duncan, exactly 12 months ago, but with the second-quarter earnings release on July 28, we learned that he, too, has now been replaced. Board member, co-founder, and former CEO Dave Ferdman is now interim CEO. The C-Suite turmoil overshadows what we thought was a good quarter. Bookings were solid, the firm ended the quarter with a record backlog, and Europe remains a source of strength. The firm’s slight full-year guidance raise was due only to pass-through revenue, and we are maintaining our $66 fair value estimate.

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Company Profile

Business Description

CyrusOne owns or operates 53 data centers, primarily in the U.S., that encompass more than 8 million net rentable square feet. It has a few properties in Europe and Asia. CyrusOne has both multitenant and single-tenant data centers, and it is primarily a wholesale provider, offering large spaces on longer-term leases. The firm has about 1,000 total customers, and cloud service providers and other information technology firms make up about half its total revenue. Its largest customer, Microsoft, accounted for over 20% of 2020 revenue, and its top 10 customers generated about 50%. After cloud providers, companies in the financial services and energy industries contributed the biggest proportions of CyrusOne's sales.

Contact
2850 N. Harwood Street, Suite 2200
Dallas, TX, 75201
T +1 972 350-0060
Sector Real Estate
Industry REIT - Specialty
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2019
Stock Type Hard Assets
Employees 441

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